MercoPress. South Atlantic News Agency

“Sooner or later” global financial crisis will reach Latam

Ibero-America Secretary General Enrique Iglesias said Latinamerica feels somehow frustrated because it is a “victim, not an actor” of the current global financial crisis, which sooner or later will reach the region.

Speaking in Madrid with the Spanish news agency EFE, he praised the speeches of Latinamerican leaders before the United Nations General Assembly which have been dominated by the effects on emerging countries of the financial seism originated in Wall Street. "Latinamerica is prepared better than ever to address the crisis, regional economies continue to expand, but it must also be considered that if the crisis persists in time, and there are no solutions, sooner of later it will reach our region", he added. Iglesias pointed to three issues: falling commodity prices; access to credit and a contraction of remittances from immigrants. "If recession persists in the north, immigrants won't have jobs and they will be sending far less money to Latinamerica". Latinamerican leaders coincided in the UN that any solution to the crisis must come through multilateralism and a reform of international financial institutions. "Current recommendations are distant from those we underwent in the eighties and nineties to overcome our financial problems", said Iglesias who for over fifteen years was president of the Inter American Development bank. He added that there's a growing world consensus that recommendations must be implemented particularly by United States and the European Union, "which are the main actors of the current process". "What is being demanded is the restitution of confidence, because the capitalist system is based on confidence and when this erodes, all falls into crisis", he underlined. "We are all facing a very big challenge, where nobody is going to be immune", but the world's leading central banks have been acting and the rescue plan from President Bush will help, "but it is still very far from the reassurance that is needed" he stressed. Iglesias praised what he described as the growing political maturity of Latinamerica to address regional problems and "solving them collectively is far better". He also pointed out that although "populist tendencies" persist in Latinamerica, together with abundance of funds there's an inclination to improve economic performance such as reducing debt, accumulating reserves and spending with a money-value concept. "There's money populism, but overall Latinamerica is making better use of the bonanza than in previous occasions". Latinamerica is completing a historic six-year expansion and is estimated to end 2008 with 4.5% growth according to IMF. However there's a growing risk of inflation and poor countries will suffer most from a global slowdown.